After trading on the Comex division of the New York Mercantile Exchange ended, minutes from the Federal Open Market Committee’s January meeting showed that officials will consider major changes to the central bank’s quantitative-easing program at the next meeting in March. Gold futures subsequently extended their decline in electronic trading. Read selected text of the FOMC minutes.

Gold is traditionally seen as a hedge against inflation. The Fed’s quantitative easing has supported gold due to worries that it may spur inflation. As a result, any indication that the Fed may scale back or end bond buying soon pressures gold prices.

Before the FOMC minutes, gold for delivery in April
US:GCJ3
dropped $26.20, or 1.6%, to settle at $1,578 an ounce on Comex, its fifth-straight session decline. Tracking the most-active contracts, prices haven’t settled this low since July 24, according to FactSet data. Watch a video on the slump in gold prices.

In electronic trading on Globex after the FOMC minutes, April gold traded at $1,570 an ounce, down $8 from Wednesday’s Comex settlement.

“Gold is having a response it should have when the Fed discusses an early ending to QE,” said Jason Rotman, president of Lido Isle Advisors in Newport Beach, Calif. “We believe gold can go to $1,540.”

“Gold has been propped up by easy money of the past three QE’s and now it could be the beginning of the end of this phase in the gold market,” he said.

Death cross

Gold’s decline on Comex came as talk of a “death cross” in the market among analysts and traders emerged Wednesday.

A death cross is “a crossover resulting from a security’s long-term moving average breaking above its short-term moving average or support level,” said Chintan Karnani, an independent bullion analyst based in New Delhi. “Additionally, the long-term moving average becomes the new resistance level in the rising market.”

In layman’s terms, “this implies that gold’s long-term bull run is over and that it could be in a bear phase,” he said. “Fundamentals are there as investors are shunning gold exchange-traded funds. Indian gold demand is not there due to a nationwide strike today by workers.” Read: Could China ride to gold’s rescue this week?

Even so, the truth is that “gold has been weak for a while and bears exploited it,” Norman said.

Gold’s not necessarily in a long-term bearish trend, according to Karnani.

“In the past, gold has reversed many times between $1,530 and $1,550,” said Karnani. “For gold to be in a long-term bear trend, it needs a daily close below $1,520 for a week,” he said. “The next one week is very crucial for gold prices. I am optimistic and do not expect gold prices to fall below $1,470 under the worst-case scenario.”

Reuters

Strength in the U.S. dollar added pressure to dollar-denominated gold prices Wednesday, with the ICE dollar index
DXY, +0.00%
trading higher at 81.059, compared with 80.450 late Tuesday. The dollar extended gains after the Fed minutes were released.

Among other metals futures, March silver
US:SIH3
dropped 80 cents, or 2.7%, to end at $28.62 an ounce, while March copper
US:HGH3
fell 4 cents, or 1.1%, to $3.61 a pound.

Platinum for delivery in April
US:PLJ3
sank $50.40, or 3%, to $1,647.10 an ounce, and March palladium
US:PAH3
fell $27.75, or 3.6%, to $736.40 an ounce. Both contracts gained more than 1% on Tuesday.

“[Platinum-group metals] demand may be curbed on reports of lower auto sales in the euro zone,” HSBC analysts said.

Also weighing on PGM prices, Anglo American Platinum Ltd.
AGPPY, -1.11%
said employees at three of its mining operations have returned to work. Employees at those operations had gone on strike following an incident that injured workers at one of its mines on Feb. 18.

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